If you are a small business owner in the United States, you may have heard of the BOI Reporting Rule. This is a new regulation that requires certain companies to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
In essence, the BOI Reporting Rule is designed to help FinCEN and other agencies protect the U.S. financial system from illicit use and to provide essential information to law enforcement, regulators, and financial institutions to detect and deter financial crimes.
What is the BOI Reporting Rule?
The BOI Reporting Rule specifies who must file a beneficial ownership information (BOI) report, what information must be reported, and when a report is due. A BOI report is a document that identifies the individuals who ultimately own or control a reporting company.
According to the rule, a reporting company is any entity that is:
- Created by filing a document with a secretary of state or a similar office under the law of a state or Indian Tribe; or
- Formed under the law of a foreign country and registered to do business in the United States by filing a document with a secretary of state or a similar office under the law of a state or Indian Tribe.
However, there are many exemptions for certain types of entities that are already subject to existing federal or state regulations, such as banks, credit unions, insurance companies, public companies, charities, and churches.
What is a Beneficial Owner?
A beneficial owner is any individual who, directly or indirectly, either:
- Exercises substantial control over a reporting company; or
- Owns or controls at least 25% of the ownership interests of a reporting company.
When and How to File a BOI Report
Reporting companies are able to file BOI reports with FinCEN through an online portal called the BOI E-Filing System. FinCEN maintains a secure and confidential database of the reported information.
The deadline for filing a BOI report depends on when the reporting company was formed or registered.
- For reporting companies that were formed or registered before January 1, 2024, the deadline is December 31, 2024.
- For reporting companies formed or registered after January 1, 2024, the deadline is within 90 after the company’s registration becomes effective.
- For reporting companies formed or registered after January 1, 2025, the deadline is within 30 days after company’s registration becomes effective.
Why You Should Care about the BOI Reporting Rule
Although the rule may seem like a hassle, it is a beneficial regulation for small businesses and the U.S. economy as a whole. By providing FinCEN with accurate and timely information about the beneficial owners of reporting companies, the rule will:
- Enhance the integrity and transparency of the U.S. corporate system and prevent the misuse of shell companies by criminals and corrupt actors;
- Strengthen the national security and the financial system of the United States and protect them from threats such as money laundering, terrorism financing, tax evasion, and sanctions evasion;
- Facilitate the investigation and prosecution of financial crimes and assist law enforcement and regulators in holding the individuals behind illicit activities accountable;
- Improve the compliance and due diligence processes of financial institutions and reduce the burden and cost of verifying the identity and legitimacy of their customers; and
- Promote a level playing field for honest and law-abiding businesses and foster a fair and competitive environment for innovation and growth.
We Can Help You
At Jurado & Associates, P.A., we understand that the BOI Reporting Rule may seem complex and confusing, especially for small business owners who have limited time and resources. That is why we are here to help you navigate the rule and comply with it in a simple and efficient way.
We specialize in corporate and business law, with extensive experience and expertise in FinCEN compliance and reporting.
We can assist you with:
- Determining whether your company is subject to the rule or qualifies for an exemption;
- Identifying and verifying the beneficial owners and company applicants of your company and collecting the required information from them;
- Preparing and filing your BOI reports with FinCEN;
We are committed to providing you with high-quality and personalized legal services. If you are interested in our services or have any questions, do not hesitate to contact us.
You can reach us by phone at (305) 921-0976, by email at [email protected], or WhatsApp at +1 (305) 921-0976.
We look forward to hearing from you and helping you with your FinCEN compliance needs.
